Is coronavirus fatal for US$25 billion Singapore-Malaysia high-speed rail link?

The cost of the project was a sticking point even before Covid-19 caused economic havoc and put a question mark over the future of travel

Is this ‘game-changing’ project facing the end of the line, or just another delay?

5-MIN READ5-MIN

Published: 9:15am, 24 May 2020Updated: 9:15am, 24 May 2020

May 31 was supposed to have been decision day on the future of the high-speed rail link between Malaysia and Singapore, but as the neighbours count their pennies amid the coronavirus-induced economic slowdown, all signs point to a further delay on a final decision.

Analysts expect a lively debate in the months ahead on whether the 110 billion ringgit (US$25 billion) project – once touted as a “game changer” for often-testy bilateral ties – will remain viable in the post-pandemic era.

This Week in Asia understands the two countries may soon announce an extension to the deadline, with both sides still keen to carry on with the development. Under the original agreement signed in 2016, construction on the project was to have been well under way by now.

But the Pakatan Harapan alliance, unexpected victors of the 2018 polls over the long-ruling administration of then leader Najib Razak – an ardent supporter of the rail link – negotiated an extension until May 2020 to decide whether to go through with the project.

The alliance cited the huge national debt incurred by Najib and agreed to pay Singapore S$15 million (US$10 million) for costs incurred for the delay. A unilateral cancellation would have triggered a far more hefty penalty, and Malaysia remains liable for that fee if it decides to go down that route.

Transport industry observers said this was extremely unlikely, given the collapse of Pakatan Harapan in March’s political coup.

Singapore Prime Minister Lee Hsien Loong and the then leader of Malaysia Najib Razak at the signing ceremony of the Memorandum of Understanding for the Kuala Lumpur-Singapore High Speed Rail link. Photo: EPA